After months of fighting off a buyout offer from Sycamore Partners, the
women’s clothing retailer succumbed earlier this month, reaching a
tentative agreement with Sycamore, a buyout firm with a roughly 10%
stake in Talbots. Under the terms of the nonbinding deal, which was
supposed to expire May 15 but was extended until May 24, Sycamore would
pay $3.05 a share for Talbots. May 24 came and went, and let’s just say they’re just not into each other anymore.
In a statement, Talbots said it had “worked exclusively in good faith
with Sycamore Partners to execute a transaction.” Sycamore told Talbots
it wasn’t prepared to do a deal now, although Talbots is still open to
pursuing an “acceptable merger agreement.” Ugh, breakups.
Now that it’s free of the exclusivity contract, Talbots will play the
field, looking for a new partner, creating shareholder value and trying
to run its troubled business. Talbots
TLB
-41.02%
shareholders are sorely in need of some value. The shares are down more than 34% at $1.68.
Meanwhile, Talbots also released its fiscal first-quarter results. Net
income rose, but sales and same-store sales declined, and the company
provided details on its store “rationalization” plan, cost cuts and said
it’s still looking for a new president and chief executive.
Talbots has been struggling for a while. It’s tried changing its
merchandise and marketing, complete with celebrity models. It has tried
to attract a younger, more fashionable shopper. It tried to cater to its
“legacy” customer. It closed stores. It shuffled top executives.
Talbots may be running out of tricks.
While most of us won’t know why Talbots and Sycamore didn’t consummate
their deal, the upshot is Talbots ends up looking like damaged goods.
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